the amended section 37, and the Commission is required by the provisions of such amended action to pay the moneys received from sales of its products into the State treasury.

Dated, October 18, 1915.

EGBURT E. WOODBURY,

Attorney-General.

To the Honorable, THE NEW YORK STATE COMMISSION FOR THE BLIND, New York City.

MORTGAGE TAX LAW, SECTIONS 251, 253, 254, 257, 259, 260, 264- SUMMARY OF DISTINCTIONS EXISTING IN RESPECT OF MORTGAGES UNDER ARTICLE.

The owner of a bond issued prior to July 1, 1906, secured by mortgage covering real property situated partly within and partly without the State, which is brought in for taxation pursuant to section 264 of the Mortgage Tax Law, is only required to pay the tax upon the proportionate part thereof represented by the security within the State.

The owner of such a bond is not given the optional right under this article to pay the tax on that part of the bond upon which a tax is not imposed and thereby secure the exemption of the whole amount of such bond from local taxation.

The right of exemption from local taxation only extends to that part of a debt, secured by mortgage on real property, upon which the tax is imposed, or upon which the optional right to pay the tax thereunder is clearly given.

The power and duty of the State Tax Commission to make the apportionment under section 260 extends to every case where an apportionment is necessary to give effect to the mortgage tax article.

The owner of such bond, brought in for taxation pursuant to section 264, may, under the rules prescribed by the State Tax Commission, be required to make the necessary statement and furnish the requisite information upon which a required apportionment can be made, as though he were the mortgagee, and he must be regarded as a mortgagee within the meaning of the statute for such purpose.

INQUIRY

Inquiry is made by the State Tax Commission as to whether or not the owner of a bond issued prior to July 1, 1906, secured by a mortgage which covers real property situated partly within and partly without the State, which is brought in for taxation. pursuant to section 264, is required to pay the tax upon the full amount thereof, or if not, whether he may waive the right of apportionment, pay the tax upon the full amount of the bond, and thereby secure the benefit of exemption from local taxation conferred by section 251 of the Mortgage Tax Law.

OPINION

The Tax Law, and particularly that part which deals with the taxation of mortgages, presents for solution many intricate questions of interpretation. In dealing with these questions correct conclusions are more likely to be reached by constantly keeping in mind the basic provisions of the statutes relating to taxation. In considering the question presented, we find that, under the statute, debts secured by mortgage are personal property and presumably subject to taxation in the ordinary manner, the same as personal property generally.

Subdivision 5, section 2 of the Tax Law provides that, "the terms' personal estate' and 'personal property,' as used in this chapter, include debts due from solvent debtors, whether on account, contract, note, bond or mortgage; debts and obligations for the payment of money due or owing to persons residing within this state, however secured or wherever such securities shall be held."

And section 3 of the Tax Law, which defines property subject to taxation, as respects personal property, says:

"All personal property situated or owned within this state, is taxable unless exempt from taxation by law." Then follow provisions for the assessment, levy and collection of the taxes thereon. The taxability of this property as a class being established, we must next look to discover whether, in a particular case, there is any statute which exempts it from taxation.

This brings us to a consideration of the Mortgage Tax Law and the extent to which the right of exemption exists under its provisions. Under this law the tax is imposed and collected only in the event of the recording of the mortgage. It is left entirely optional with the mortgagee whether or not he will record it, and if he does, the tax is imposed upon the basis of the amount secured to be paid. The tax is, therefore, called a recording tax, but the extent of the tax is measured, at the rate prescribed, by the amount secured thereby. The exemption from other taxation granted by this statute is made to depend upon the fact that it is taxed thereunder. Clearly, a debt secured by an unrecorded mortgage would not be so exempt, because it has not been taxed by virtue of its provisions, which is an essential prerequisite to its exemption from other taxation.

It remains to be considered whether or not this right of exemption from other taxation exists where the mortgage debt is only taxed in part, under this statute, or, in case the mortgagee makes voluntary payment upon the whole amount secured, although only required to pay on a part thereof.

With certain exceptions, not necessary to enumerate here, section 251 provides that "all mortgages of real property situated within the state WHICH ARE TAXED BY THIS ARTICLE, and the debts and obligations which they secure, shall be exempt from other taxation by the state, county and other local subdivisions."

The real criterion for determining whether the right of exemption exists depends upon the construction to be placed upon the words "which are taxed by this article "-in other words, whether or not the debt for which the exemption is claimed has been taxed under this law, within the meaning of its provisions. to entitle it to such exemption.

In view of the complexity of the Mortgage Tax Law its interpretation will be greatly aided if we keep in mind certain definite distinctions which exist. I may be pardoned, therefore, for briefly departing from the discussion of the question presented, to point out some of these distinctions.

1. For administrative purposes, three classes of mortgages are recognized: (a) individual mortgages; (b) corporate trust mortgages, and (c) corporate mortgages not in trust.

2. Individual mortgages and corporate mortgages not in trust, as respects the general application of the statute, are treated alike and fall into the same class. Both are required to pay the tax upon the maximum amount of principal debt secured at the time of recording, or that may be secured at any time thereafter, pursuant to section 253.

3. Corporate trust mortgages are required to pay the tax upon the amount advanced or secured at the time of recording and thereafter pay the tax upon the amount of each advancement at or before the time such advance is made, pursuant to section 259.

4. Section 254, relating to "prior mortgages," deals with individual mortgages and corporate mortgages not in trust, in cases where the whole amount was advanced prior to July 1, 1906, under two conditions: (a) Mortgages recorded prior to July 1,

1906, pay the tax upon the amount remaining unpaid at the time of filing the statement, which brings them in for taxation at the option of the owner, as permitted by this section; (b) Mortgages executed and delivered before July 1, 1906, but not recorded until after that date, pay the tax upon the amount unpaid at the time of recording.

5. Section 264, relating to "prior advance mortgages," has to do with all three of these classes of mortgages which were recorded prior to July 1, 1906, and is operative in cases where only a part of the amount was advanced prior to that date, and the remainder was advanced, or to be advanced, thereafter, except that it would apply to corporate trust mortgages, even though the whole amount had been advanced prior to that date.

6. Section 259, relating to the taxation of corporate trust mortgage, applies only to such mortgages as are recorded on or after July 1, 1906, except that, for administrative purposes, certain provisions of the section are made applicable to prior advance mortgage by section 264.

7. The distinction should be kept in mind that all mortgages executed and recorded after July 1, 1906, are required to pay the tax at the time of recording upon the full amount secured, except that corporate trust mortgages may pay the tax at the time advancements are made.

All mortgages executed and recorded prior to July 1, 1906, are required to pay the tax only upon the amount advanced after that date, such payment to be made at or before the time cach advancement is made.

All mortgages executed before but recorded after July 1, 1906, pay the tax, if individual mortgages or corporate mortgages not in trust, upon the whole amount secured and remaining unpaid at the time of recording, or, if a corporate trust mortgage, upon all amounts advanced or secured and remaining unpaid at the time of recording, and thereafter upon advancements as made.

8. Section 260, relating to apportionments, applies to all classes of mortgages, and this whether they are prior advance mortgages or otherwise.

9. Section 251 contains the only provisions granting the right of exemption to mortgage, and debts secured thereby, and is confined to mortgages "which are taxed by this article."

10. Passing for a moment the case of mortgages covering real property situated partly within and partly without the State, and where, in consequence thereof, only a part of the mortgage debt has been used as a basis of fixing the amount of the tax, we are presented with these conditions:

a. Upon prior advance mortgages of all classes, under section 264, there may remain a portion of the debt secured thereby untaxed, and therefore it is by said section expressly provided that, "in case of any mortgage taxable under this section, the portion of the indebtedness secured thereby upon which the tax imposed by this section is paid, and such portion only, shall be exempt from taxation under the provisions of section two hundred and fifty-one of this article."

b. All other mortgages taxable under the article, and the debts secured thereby are deemed to be fully taxed under the various provisions thereof, and hence there was seemingly no necessity for a provision limiting the right of exemption as expressed in section 264.

11. In the case of serial bonds, secured by mortgages recorded prior to July 1, 1906, the owners thereof, or of any of them, are also given the optional right to have them taxed under the act and secure the benefit of such exemption.

Primarily the right of exemption granted by this act (section 251) as already stated, is made to depend upon whether the mortgage is " taxed by this article."

By force of the limitation on the right of exemption under section 264, as to prior advance mortgages, and the fact that all other mortgages are fully taxed under various other provisions of the act as contemplated thereby, the only cases in which the question is presented as to whether or not mortgages have been so taxed arise where the real property securing the mortgage debt is situated partly within and partly without the State, and apportionments have been made pursuant to section 260.

In such case can it then be said that this part of the debt (which has been excluded as a basis of determining the amount of tax to be paid, because of its being secured by real property situated partly outside of the State) has been "taxed by this article?"